Welcome back everyone, I hope you all had a great start to the week. Looking back to the previous levels posted in Flow State #99 yesterday, we saw quite a bit of upside and downside with the stocks along with the S&P futures posted.
Starting with the S&P, our levels were focused on price moving higher up to the 6967 value area high and to be met with sellers. While price did rally up to this level, we instantly continued higher for the rest of the session. So this was for scenario A, while scenario B covered if price was able to break over the value area high then it would invalidate shorts and trigger a long setup at the 6975 value area low. So for futures traders this would be two trades on the day with a short not working which would be cut for a couple handles and then a long at the value area low offering 20 handles of upside.
Here’s the levels posted yesterday:
Now while we only saw 20 handles of upside in the cache session, overnight the market bounced off the 6975 value area low on the news of tariffs being increased on South Korea. From there the market took this news quite well and continued to rally all the way above 7000. My target for the day was up at 7017 which was the value area high. All of this may be confusing if not looking at the chart being used to pull the levels which is posted inside the paid section down below. When referring to price breaking over a value area high and then breaking above the value area low this means that there was a value area price broke above it moved through a low volume node and into another value area. In this case price broke above the 6967 value area high and pushed through the low volume node and broke above the 6974 value area low.
So overall in this session we saw three to five handles of the market moving against us in shorts but then flipped along and saw over 20 handles of upside. I commented on the fact that the S&P and NASDAQ were looking strong breaking above moving averages specifically the 10 week EMA. My only concern was the overall weakness in tech which has started to resolve with that QQQ now breaking back above the recent downtrend. My main thesis was overall the S&P is stronger than the NASDAQ and if you’re bullish then you want to remain focusing specifically on the S&P. Until the NASDAQ was able to break over this trend line I wouldn’t want to be heavily weighted inside tech. By the end of the week we will look at the closing price and see just where the market finishes. If the NASDAQ is able to break and hold above this trend line that I expect overall tech to see some strong upside leading into the next week granted we don’t get any news over the weekend that could negatively impact the markets.
With that being said I want to stress that any short term positions being put on must be aware of the high odds of negative and even positive news coming out over the weekend. Carrying positions over the weekend has much higher risk since all of this tariff drama started. This market is heavily driven by news and can flip on a dime. With all this out of the way on the indexes let’s now shift our focus to some of the stocks that were posted yesterday.
We covered Rocket Lab, The Metals Company, AppLovin, AST Space Mobile, and Palantir. All of these stocks were covered over on X for all to see. Deeper analysis is provided right inside this newsletter which not only covers the same chart but gives deeper analysis into the reasoning behind the setup along with option contracts that will align with the overall thesis. For instance, rocket lab is currently trading in a daily time frame channel. With price hitting the upper boundary we expected to see some sort of selling back to the midpoint and lower end of this channel. Since Friday’s close price has sold over 10% in one session. I will cover the option contracts that were provided for this stock just this one time as the other four are exclusive to subscribers. We pointed out the January 15th 2027 75 puts which were currently trading at 19.70 offer plenty of time until expiration and leaves plenty of room between the strike price and the target price for the stock. We also pointed out if looking to get them cheaper you could simply wait for a move back up to the upper bound of the channel. These contracts are already up over 12%.
Before moving on I do want to point out that these positions are more mid to longer term. Sometimes I will send out a shorter term contract for options but usually all of them will be six months to a year out until expiration. Overtime I will include some stocks that will be free to everyone.
With all of this out of the way we will now dive into the levels on the S&P for today's session.
S&P (ES) Levels
There will be no changes to the levels as volume respected the current value areas that were posted yesterday. We have now seen price move above the large value area that holds the majority of the volume for the last three months. This is another attempt to potentially see a break through all time high and ideally we get that continuation move that we wanted previously.
The major area we need to hold above is between the value area high at 6967 and the value area low at 6974. Buyers must defend the value area low and not let price slip back through the low volume node and break back into the previous value area. With that being said, we want to pay attention to the 6974 value area low as a key support for the remainder of the week to remain bullish. As long as this level holds I expect an attempt at the 7017 value area high.
